SSI Treatment of Home Transfers: A Case Note
By Gregory Wilcox, Esq.
California Elder law attorneys all know that Medi-Cal beneficiaries can transfer their homes to third parties without prejudicing their continuing benefits. Such transfers allow the Medi-Cal beneficiaries’ heirs and testamentary beneficiaries to avoid having their homes exposed to the Medi-Cal program’s estate recovery claims after the Medi-Cal beneficiaries’ death for the value of Medi-Cal benefits provided. As a result, the transfer of homes to third parties by Medi-Cal beneficiaries in nursing homes has become fairly routine – at least among those who have adequate legal advice. However, Medi-Cal beneficiaries in nursing homes generally receive only Medi-Cal for their support. They rarely receive Supplemental Security Income (SSI), and so do not have to satisfy that program’s separate rules.
SSI issues do arise if the Medi-Cal beneficiary does not reside in a nursing home. A Medi-Cal beneficiary will often reside in a residential care or assisted living facility, with a relative, or independently. In those cases, the beneficiary will still be generating Medi-Cal estate recovery claims for the value of Medi-Cal benefits paid, and the beneficiary will still have the same incentive to divest his or her home in order to protect it from Medi-Cal’s later estate recovery claims. However, such Medi-Cal beneficiaries also often qualify for SSI. Indeed, they often receive Medi-Cal support because they are entitled to it as an SSI beneficiary. In this circumstance, if the Medi-Cal beneficiary tries to divest his or her home to avoid later Medi-Cal claims, the transfer has to satisfy SSI transfer rules as well. If the transfer runs afoul of those rules, the beneficiary of SSI not only risks losing his or her SSI benefits, but also the Medi-Cal benefits that are linked to the beneficiary’s SSI.
The reason for this danger is that the SSI program takes a different position on home transfers. The precise parameters of its tolerance for such transfers are not as well defined as Medi-Cal’s, which will hardly ever claim that transfer of a home is disqualifying. However, there is no serious question that the SSI home transfer rules are more restrictive. Added to this is the risk that local Social Security offices will simply ignore whatever tolerance exists in the applicable SSI rules, and simply treat any home transfer as disqualifying for SSI beneficiaries.
These issues surfaced with a vengeance for me in 2007 in the case of my client, Ms. D. Duffy (Duffy),* a victim of multiple sclerosis. Duffy owned a condominium that she had been able to purchase and live in when she was younger and still working. However, by 2007 Duffy had long been living in residential care and receiving both SSI and Medi-Cal. Her home had been largely vacant for many years. When Duffy and her mother consulted with me, I advised them that if they left things as they were, upon Duffy’s eventual death, there would be a huge Medi-Cal estate recovery claim up to the full market value of Duffy’s home. If Duffy had been in a nursing home, the right planning step to avoid such a claim would have been clear: simply transfer the home to Duffy’s mother (with some kind of retained right to return home to satisfy both Medi-Cal and the IRS). However, Duffy’s SSI benefits complicated the planning substantially. Was transfer of her home to her mother going to destroy Duffy’s eligibility for SSI – and her linked Medi-Cal eligibility along with it?
The applicable SSI law seemed clear.
First, Duffy’s home was not a “resource” at all because she alleged she intended to return to it to live. 42 USC §1382b(a)(1) and 22 CFR § 416.1212(b). Accordingly, it was exempt (aka, an “excluded resource”), not counted by the SSI program, and most importantly not subject to SSI’s rules that penalize only transfers of “resources.”
Second, even if Duffy’s home were a resource for purposes of the transfer rules, the transfer was eligible for an exception that allows a transfer that is for a purpose other than qualifying for SSI benefits. 42 USC §1382b(c)(1)(C)(iii)(II). Because the home is exempt and not counted as a resource anyway, the transfer of it could not possibly be for such a purpose.
These two rules are enshrined not only in the applicable federal statutes but also in formal Social Security Regulations and informal guidelines. Specifically, the Social Security Administration’s Program Operations Manual System (POMS) provides that a home is an “excluded resource.” POMS SI 01130.100, B., 1. (“Policy for Excluding the Home”). Second, POMS makes it clear that an applicant or beneficiary can rebut the presumption that a transfer of a resource was for a purpose of establishing or maintaining eligibility for SSI. POMS SI 01150.125, B. (“Exceptions – Transfers for Purposes Other Than to Qualify for SSI”). It even provides an example of a home transfer that was not disqualifying because the owner had intended to return to it to live at the time of the transfer. POMS SI 01150.125, E., 5. (“Examples – Rebuttable Determinations”: Mr. Vernon).
Based on this reading of the law, I advised Duffy to transfer her home to her mother. Thus began a four year odyssey through the Social Security Administration’s appeals process. The local SSA office quickly determined that the transfer had been disqualifying. It also determined that Duffy’s home had not been her exempt home for the last five years and that she owed SSA about $13,000 in overpayments for benefits she should not have received. As a result of an Informal Conference in the local office, SSA relented on its past overpayment claim, but it still terminated Duffy’s future SSI benefits.
I felt I needed to defend the correctness of the advice I had given, so I requested a Fair Hearing before an Administrative Law Judge. It was held in Oakland, California, in the fall of 2008. The ALJ summarily (and rudely) denied Duffy’s appeal in its entirety. I then took the matter to Social Security’s Federal Appeals Council in Falls Church, Virginia. About two years later, on September 30, 2010, the Federal Appeals Council issued its “Order Remanding Case to Administrative Law Judge.” It said the record was incomplete and the matter had to be re-heard. Re-hearing finally occurred in November, 2011, before Judge Robert P. Wenton.
Here’s what Judge Wenton found in his “Notice of Decision – Fully Favorable,” December 30, 2011:
- Even though Duffy had stopped actually living in her home nine years earlier and even though the actual ownership title was held in a living trust, she had not rented it and her statements that she intended to return home were “constant, credible, and non-contradictory.” Accordingly, it was “excluded from countable resources” until the date she transferred it to her mother.
- Duffy “did not transfer a resource when she transferred her home to her mother in 2007; therefore, she should not have been subject to the provisions for transfer of an asset for less than fair market value.” In other words, “the [address] home was not a resource; it was excluded from claimant’s resources.” Accordingly, “transfer of the excluded asset, even for less than fair market value, is not an action that triggers the provisions of 20 CFR 416.1240 and 416.1246 requiring a period of ineligibility for benefits.”
- Duffy successfully rebutted the presumption that she transferred the excluded [address] property for the purpose of becoming or maintaining eligibility for supplementary security income. Accordingly, “this meets the requirements for an exception to the 36-month transfer of resources rule. 20 CFR §416.1240 and §416.1246.” Specifically Judge Wenton found that “The claimant credibly stated that she transferred the property to her mother in order to avoid claims by Medi-Cal, a purpose unrelated to her eligibility for supplemental security income.”
Judge Wenton’s conclusion was:
No overpayments should have resulted from these transactions and the claimant should not have been subject to a period of ineligibility for benefits. Therefore, any funds withheld from the claimant either to repay the overpayment or to satisfy the period of ineligibility must be returned to her forthwith.
Back in December 2001 I wrote an article in CANHR’s Legal Network News entitled, “We’ve Been Right All Along: New SSI Rules on Transfer of a Home” (still available on the CANHR website). It said that SSI rules permit transfer of a home without prejudice to benefits, just like our Medi-Cal rules provide, as long as the property maintained its status as an exempt “home” because owner intended to return home. Well, we’re still right – with two caveats:
- There is confusion in Judge Wenton’s decision. If the home is not a resource, and the transfer rules don’t apply at all, then there is no need to qualify for an exception from the transfer rules (in this case, based on an argument that the transfer was for a purpose other than to maintain benefits). Either will work, but they are not really consistent.
- There is an important way that the SSI rules on transfer of a home differ from the Medi-Cal rules. The Social Security Administration’s implementation of the SSI rules require a case by case factual determination of both “intent to return home” and “a purpose other than to qualify for benefits” (here meaning SSI benefits). It is possible to fail these requirements if the facts are not favorable. In contrast, the Medi-Cal program will generally accept “intent to return home” by mere assertion, and will accept a “purpose other than to qualify for benefits” as a matter of logical implication from the fact that the home is exempt.
SSI transfer of assets rules are actually more similar to Medi-Cal rules than they are to the Medicaid transfer rules of the other 49 states – which generally trigger disqualification when a beneficiary or applicant transfers a home. The problem is how the SSI rules are applied by the claims representatives in local SSA offices. Hopefully, readers will be able to use copies of Judge Wenton’s Decision to convince SSA claims representatives that our view of the SSI rules on home transfers is the correct one. Copies of Judge Wenton’s December 30, 2011, “Decision – Fully Favorable” are available from CANHR.
*Client’s name used with permission of client.
(Gregory Wilcox, Esq., is an attorney in private practice in Berkeley, CA)